Egypt’s recent economic reforms top the agenda at the SWIFT Business Forum Egypt

Cairo, 3 April 2017 – SWIFT, a global provider of secure financial messaging services, brought together almost 200 representatives from the Egyptian banking and financial sector in Cairo, Egypt for the SWIFT Business Forum Egypt to discuss the pressing challenges of cyber threats, de-risking and compliance.

Tarek Fayed, Sub-Governor, Central Bank of Egypt, gave the keynote speech and stressed that recent reforms implemented by the Egyptian Government and Central Bank of Egypt are steering Egypt onto a better economic path.

“The Egyptian reform plan, which was supported by the International Monetary Fund (IMF), has set the Egyptian economy on the right course and led to extraordinary results. We have restored confidence from international investors, which has meant that we have covered the Egyptian bond issuance three times and the Egyptian stock market has increased by around 50%. Furthermore, banks’ foreign currency resources have reached a record of around US$ 15 billion since the flotation regime, meaning that we have met all imports requirements totaling around US$ 23 billion during same period.” said Mr Fayed.

The Egyptian reform plan, which was supported by the International Monetary Fund (IMF), has set the Egyptian economy on the right course and led to extraordinary results. We have restored confidence from international investors, which has meant that we have covered the Egyptian bond issuance three times and the Egyptian stock market has increased by around 50%. Furthermore, banks’ foreign currency resources have reached a record of around US$ 15 billion since the flotation regime, meaning that we have met all imports requirements totaling around US$ 23 billion during same period.

Tarek Fayed, Sub-Governor, Central Bank of Egypt

Also speaking at the conference, Akram Youssef Tinawi, Managing Director & CEO of Bank ABC Egypt, and Member of the Federation of Egyptian Banks, said: “In November 2016, the Central bank of Egypt decided to liberalise the exchange rate according to mechanisms of supply and demand. The country’s financial system illustrated its strength in the months thereafter by absorbing the impact of the flotation and still creating EGP56 billion in profits since November 2016.”

In November 2016, the Central bank of Egypt decided to liberalise the exchange rate according to mechanisms of supply and demand. The country’s financial system illustrated its strength in the months thereafter by absorbing the impact of the flotation and still creating EGP56 billion in profits since November 2016.

Akram Youssef Tinawi, Managing Director & CEO of Bank ABC Egypt, and Member of the Federation of Egyptian Banks

The latest SWIFT traffic data, released today, corroborates these positive trends. Data shows that SWIFT traffic volumes increased 12.6% in 2016, ahead of global growth for SWIFT of 6.4%. In the year to date, traffic volumes are up 5.8%. This growth is underpinned by a significant increase in treasury volumes specifically of 42.7%.

The SWIFT Index, a methodology for anticipating GDP growth by combining global payments data with actual quarterly GDP growth figures, demonstrates that SWIFT data is closely correlated to economic activity. Rising SWIFT traffic volumes are therefore an indicator of economic growth. The data released today could therefore indicate the beginning of continued economic growth for Egypt and the success of liberalising the exchange rate.

Khaled Moharem, Head of Middle East & North Africa, SWIFT said: “Egypt’s economy is back on track after several years of challenging economic conditions. The latest data from SWIFT reflects this. The SWIFT Business Forum provided an ideal opportunity for the Egyptian financial community to come together and discuss how to take Egypt’s financial sector to the next level.”

With the theme “Building a stronger future”, the event examined the future of banking in an ever-changing regulatory environment and technology developments in the new digital economy.

Sessions focused on financial crime compliance, and the challenge of de-risking in the region, the future of correspondent banking and overcoming the ever increasing cyber risk.

The power of the SWIFT Index in anticipating GDP growth was empirically tested in collaboration with the Center for Operations Research and Econometrics (CORE), a leading interdisciplinary research institute in the fields of econometrics, economic theory, game theory and operations research. This econometrics expertise was essential to assess how the SWIFT Index relates to GDP growth, and to quantify its superiority relative to standard benchmark models.

Whilst the SWIFT Index is specifically relevant to OECD countries, the validation of SWIFT data and methodology by CORE demonstrates the relevance of SWIFT traffic information as a means of understanding economic activity.

The strength of the SWIFT Index is posited on the ubiquity of SWIFT payment traffic, which acts as a mirror of economic activity. The raw data at the source of the Index is the SWIFT MT 103 message. This is a specific message format that enables the bilateral transfer of information about payment transactions between customers of different banks or financial institutions. It is the de facto global standard for cross-border single customer credit transfers and is used primarily for commercial rather than low-value retail payments. The data collected from these messages is therefore fact-based. Rather than reflecting the sentiment of particular actors, it is an objective measure of real economic activity. To construct the index the header information of MT103 messages is aggregated at a country level providing several million data points each month. In addition to its close correlation with underlying economic activity, the MT103 provides an additional distinguishing advantage for nowcasting: the aggregated volume data is available on a monthly basis within a few days of the end of the preceding month.

Increasingly, the SWIFT Index family of products is being used by economists and decision makers as a delay-free, fact-based leading indicator tool for short-term GDP evolution.

About SWIFT
SWIFT is a global member-owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging, standards for communicating and we offer products and services to facilitate access and integration; identification, analysis and financial crime compliance. Our messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories, enabling them to communicate securely and exchange standardised financial messages in a reliable way. As their trusted provider, we facilitate global and local financial flows, support trade and commerce all around the world; we relentlessly pursue operational excellence and continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies. Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centres.